Exela Technologies Inc (XELA) 2018 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Exela Technologies First Quarter 2018 Call. My name is Austin. I'll be your host operator on this call. (Operator Instructions) Please note, today's event is being recorded. I would now like to turn the meeting over to Jim Mathias, Vice President, Investor Relations. Please go ahead.

Thanks, Austin. Good afternoon, and welcome to the Exela Technologies First Quarter 2018 Conference Call. Presenting on today's call are Ron Cogburn, our Chief Executive Officer; and Jim Reynolds, our Chief Financial Officer. Following prepared remarks made by Ron and Jim, we will take your questions.

Today's conference call is being broadcast live via webcast, which is available on our Exela Investor Relations website. A replay of this call will be available until May 17th, 2018. Information to access the replay is listed in today's press release, which is available on our website under the Investor section.

During today's call Exela will make forward-looking statements regarding future events and financial performance. These forward-looking statements are subject to known and unknown risks and uncertainties, and are based on current expectations and assumptions. We undertake no obligations to update any statements to reflect the events that occur after this call. Please refer to the company's filings with the SEC for factors that could cause our actual results to differ materially from any forward-looking statements. Our 10-K includes risk factors that could cause our actual results to differ materially from the forward-looking statements.

During the course of today's call, we'll refer to certain non-GAAP financial measures. Reconciliations between GAAP and non-GAAP results we discuss on this call can be found on our Investor Relations page of our website. As a reminder, financial results discussed on today's call reflect pro forma combined company results for the business combination of SourceHOV and Novitex, which closed on July 12, 2017. Please note, the results or presentation that accompanies this conference call and an investor fact sheet are also accessible in the IR section of our website.

We will begin by turning the call over to our CEO, Ron Cogburn.

Thanks, Jim. Good afternoon, and thanks, everyone, for joining us today. We're beginning to see the early signs of the benefits provided by the successful execution of our strategy of introducing business process automation to our customers, executing on cost savings, and investing for growth. Based on our strong first quarter results highlighted by pro forma revenue growth of 8.7% and pro forma adjusted EBITDA growth of 10.9%, we're increasing our outlook for both revenue and adjusted EBITDA.

Now I'd like to cover a few highlights for the quarter. Let's begin on Slide 5. Here's a little more detail around the results. First quarter results were highlighted by pro forma revenue growth of 8.7% year-over-year to $393 million. The segmentation of this revenue for the quarter included 79.3% for ITPS, 14.9% for healthcare solutions, and 5.8% for legal and loss prevention services. Profitability was also up 10.9% year-over-year, with pro forma adjusted EBITDA of $69.6 million.

Exela continues to enjoy low CapEx intensity, with only 2.2% of the revenue for Q1. We continue to be excited about the six large customers now generating more than $25 million in revenue with an eye on the top 197 that generate between $1 million and $5 million of annual revenue. This is where our organic growth will emerge. With approximately $1.5 billion in an annualized revenue stream over a broad base, our largest customer represents only 6% of our pro forma revenue. Customer numbers between two and 20 represent 27% of our pro forma revenue. The top 100 customers represent 58% of our pro forma revenue, which means we have lots of white space opportunity.

Now let's discuss the revenue generation by our team. As I've mentioned in previous quarters, our revenue per full-time employee, or FTE, has dramatically improved over the last 10 years. Growing from a BPO-type metric of $17,000 per FTE more than a decade ago to a BPA-type metric now at $69,000 per FTE. The revenue per FTE metric grew by 5% alone in the period between December 2017 and March 2018. All of this is a result of our automation platforms that we utilize every day, as well as our customers.

Now let's turn to Slide 6. The mission to extend Exela's global leadership position in business process automation continues. We have significant whitespace opportunity to harvest, and we're expanding our customer engagements. For example, we are opening Exela Innovation Centers in key business markets. At those centers, we can showcase our full suite of solutions and collaborate with customers to solve their problems and to launch new services. If you haven't experienced our Innovation Center, please reach out, and we can host a meeting with you and your group.

Early signs of our efforts are very positive, with over 24 pilots to date. Our work to share the breadth and depth of the Exela solutions with our customers continues, and we're investing in people and technology to further build customer awareness.

Our customer, our company, is on a journey to work with our customers to identify manual processes where, through the application of our proprietary software technology, we can provide automation. Through automating previously manual processes, workers become more efficient and productive. Our customers benefit from automation and digitization of information by gaining the ability to aggregate and make sense out of previously disparate pieces of data and to improve their decision-making capabilities. Ultimately, we believe this transformation will drive higher revenue and improved profitability for Exela.

We have a high degree of revenue visibility. On a trailing 12-month basis, total contract value one was $1.525 billion. The level of visibility gives us confidence in our ability to accurately forecast the trajectory of our business, going forward. We also have a high renewal rate on strategic accounts, over 95%, which is further proof of how effective we are at working to configure and implement meaningful and valuable solutions to our customers year-over-year.

Importantly, we continue on our path of growth. We aim to keep a broad customer base and generate revenue from a number of different customers. Our strategy to grow is focused on increasingly applying our solutions throughout our 3,500 customer base. Long sales cycles are a fact of our business, and that's why we are pleased to have over 24 pilot programs in place today. Only a year ago, we only had a handful of pilots.

As I mentioned last quarter, we have several opportunities in financial services, insurance, and healthcare that turned into these active pilots. Pilots, as you know, began as a proof-of-concept, then they move to a small program utilizing a fraction of the customer's volume, and then to full production. One such example was an initial pilot for a large insurance company with 3,800 of their agents, and after successful completion, we converted this to a full production rollout with their entire 14,000 agent network.

Our mobile deposit and payment processing app significantly reduced the effort, as well as the cost, and it also accelerated the insurer's journey towards digital transformation, and, most importantly, it enhanced the customer experience. In addition, just this last week, or just this week, our Zuma Liquidity Solutions platform was showcased as the opening act at Finovate, one of the largest FinTech conferences in the world. Zuma was created to address the growing need for a more intelligent, efficient, lending marketplace, which not only includes more asset classes than ever before, but also more potential financing sources willing to participate. You can check out the video next week of the conference and see our presentation.

Importantly, as a first mover in the BPA space, we're investing to increase the awareness of Exela and our solutions. We're committed to strategically making investments in people with sales, marketing, and strategy, as well as continuing to invest in our technologies. To this end, some of you on the call have been to our innovation centers in New York or in Los Angeles. We're in the process of opening up other innovation centers across the globe geographically located in the areas where our customers can conveniently access them. These centers are set up to demonstrate the breadth of our solutions to current and prospective customers, while early the response from the customers has been overwhelmingly positive.

In addition to the investments in building customer awareness, we're also continuing to participate in industry trade groups and present at shows. We're excited to tell others about the journey we're on, ensuring stakeholders fully understand and appreciate how our business process automation solutions are different than what the traditional BPO industry has previously offered.

Now let's turn to Slide 7, Global Presence. We're approximately 22,000 employees strong at nearly 1,100 onsite client facilities and 150 delivery centers in over 50 countries, where we're conveniently close to our customers. Note that our largest concentration of employees is in North America, and we have about -- only 30 FTEs with H1B visas, and we have virtually no contractors. Important to note from this slide is that we have over 2,000 FTEs dedicated to the IT and technology that's required to support our BPA platforms worldwide.

Now let's turn to Slide 8, our distinguished customer base. We work with many of the largest companies in the respective industries that they serve, and our revenue comes from diverse end markets. The total addressable market for our solutions is large, and it's growing. We have over 3,500 customers, which include 60% of the Fortune 100, along with many of the largest retail chains, banks, law firms, healthcare insurance payers and providers, and of course, telecom companies. Over 50% of our revenue mix enjoys the tailwinds of the fastest-growing segments in that industry, and those are BFSI and healthcare. Exela does business with the top 10 U.S. banks, eight of the top 10 retailers, nine of the top 10 U.S. insurance companies, and the top five U.S. telecoms, along with the top five insurance payers.

Now let's turn to Slide 9. Our focus over the long-term through execution of our strategy is to drive shareholder value. We've highlighted four broad initiatives that I'll bring you up to date on. Let's start with BPA. The creation of Exela enabled and expanded business model and provided us with a first mover advantage in BPA. Customer response has been very positive. Growth within our largest customers is ahead of our consolidated revenue growth, and we have a number of pilot programs that I mentioned, 24 and counting, and we have a lot of interesting conversations with many of our largest customers, which should drive future growth.

Secondly, when Exela was formed last year, we found out a lot of customers simply didn't know our name, or they didn't completely understand the set of solutions we could provide them. Business process automation is a concept some of our customers are still becoming familiar with. To address that need, and to increase the level of overall awareness, we've opened a number of innovation centers, as I mentioned previously. There's two open to date, and we have two more under construction. Additionally, we've invested in people and technology and other profile-raising initiatives that we believe will help customers better appreciate our solutions.

Third, let's talk about cost savings, which is a big part of our story. During 2017, we delivered more than $40 million in cost-saving initiatives. Savings during 2017 included a lot of savings related to the business combination. Q1 2018, our achieved savings was $14.8 million. Our 2018 guidance includes $40 million to $45 million in savings, with the remainder being realized in 2019. Realization of savings in 2018 and beyond are increasingly related to COGS as we implement our technology in our customer engagements.

And fourth, accretive M&A. Asterion is a good example of a tuck-in acquisition that we like. Asterion used to be part of Novitex, and it's a business we feel we have a good knowledge of and a proven plan to transform the business unit. Essentially, we truly believe it was an extended execution of our strategy to integrate similar businesses and to increase the opportunities for both revenue and EBITDA transformation.

The acquisition comes with a minimal customer overlap, and is highly strategic to expand Exela's pro forma combined European business revenue to over $200 million. This acquisition will enable Asterion customers to access Exela's full suite of BPA solutions and also strategically position Exela to expand existing revenue base through a broader portfolio of offerings with a large European presence.

The transaction is anticipated to be accretive, slightly deleveraging in 2018. Important, though, is that we want to maintain our financial flexibility that enabled a strategic acquisition like this and opportunistic actions that ultimately help drive future growth and profitability.

We had a great start to the year, with 8.7% top line growth and adjusted EBITDA margins that increased year-over-year and sequentially. We've increased our full-year 2018 guidance for revenue and adjusted EBITDA. We're executing on a strategy to best position Exela for long-term sustainable growth, and to achieve a valuation that better represents the strengths of our business.

And now I would like to hand the call over to Jim Reynolds, who will discuss our financial results in greater detail. Jim?

Thanks, Ron. Let's turn to Slide 11. Based on our pro forma revenue growth of 8.7% and adjusted EBITDA growth of 10.9%, we're increasing our 2018 annual guidance for both revenue and adjusted EBITDA. From a quarterly highlight perspective, in addition to higher revenue and adjusted EBITDA, we invested over $26.5 million in growth initiatives. We reported net loss improved by $34.4 million from the fourth quarter of 2017. At the end of the first quarter, our total liquidity was $117 million. And finally, Exela has $334 million in usable net operating loss carry-forwards available to offset pretax income.

Moving to Slide 12. From a P&L perspective, revenue for the first quarter were up 8.7% to $393.2 million compared with $361.9 million in Q1 of 2017, and up 1.8% from Q4 of 2017. On an accounting segment basis, information and transaction processing solutions, or what we call ITPS revenue, was $311.9 million and grew 11.6% year-over-year. This segment revenue also increased 3.5% sequentially. The year-over-year increase in ITPS was driven by increased volumes and expansion of services within existing customers, as well as new customers. We saw continued growth in our banking and financial services verticals, as well as our commercial, manufacturing, and technology markets.

Revenue in our healthcare solutions segment was $58.6 million compared with $59.1 million in Q1 of 2017, and in line with our expectations. This segment was down slightly from $60.1 million in the fourth quarter of 2017. The decline from Q4 was driven by lower volumes the company received during the quarter. This is common, as open enrollment volumes for insurance ends late in the fourth quarter.

Finally, in our third reporting segment, legal and loss prevention services, or Legal, our revenue was $22.6 million, down approximately 3.4% year-over-year compared with Q1 of 2017. We had a small noncore asset sale in March of 2017 that impacted the year-over-year comparison by $1.1 million. As a reminder, our revenue in our legal segment has a stable base, but is more event-driven, and therefore can fluctuate between quarters.

On the next page, 13, we reported operating income of $14.7 million, flat on a year-over-year basis. Our operating income was driven by revenue growth, slightly offset by higher costs of revenue, along with lower SG&A expenses as a result of our flow-through cost savings initiatives. We saw a 14% decrease in our SG&A expense year-over-year even after the investments in certain growth initiatives and higher public company costs.

Our operating income was also negatively impacted by a $7 million increase in our amortization expense during the quarter related to an accelerated expensing of our legacy trade names. This accelerated expense will continue over the next three quarters. Exela's net loss for the current quarter improved by $34.7 million over Q4 2017 to a net loss of $24 million. On a year-over-year basis, it improved by $1.4 million.

We are continuing down the path to transform our lower margin business, Exela Enterprise Solutions, which we acquired in July of 2017. We are making good progress, and we expect this transformation to take about 12 to 15 months.

On Slide 14, our EBITDA in Q1 2018 increased by $13.1 million year-over-year to $56.1 million. Our adjusted EBITDA for Q1 of 2018 was $69.6 million, representing a margin of 17.7% compared with $62.7 million and a margin of 17.3% from Q1 2017. Business optimization and restructuring expenses increased during the quarter as we continued to execute on our plan to deliver between $40 million to $45 million in savings flow-through in 2018.

Touching on cost savings. We realized nearly $14.8 million during the first quarter. As we complete our savings initiatives in 2018 and '19, we expect further adjusted EBITDA to converge with adjusted EBITDA during 2019.

Now turning to Slide 15. On a pro forma basis full-year 2017, we reported a further adjusted free cash flow conversion rate of 87.8%. Exela's strong free cash flow profile and conversion rate is due to our low CapEx operating model. In the first quarter of 2018, our CapEx was 2.2%, or $8.7 million of our revenue, and 90 basis points lower on a year-over-year basis. Exela also invested $26.5 million in business initiatives during Q1 and working capital related to revenue expansion and business optimization costs to drive our future savings.

Turning to the capital structure and other highlights on Slide 16. At March 31, 2018, total liquidity was $117 million and net debt was $1.366 billion. We had global cash of $37.3 million and an undrawn $100 million revolving credit facility, of which $20.6 million was blocked for standby letters of credit. Cash was down from December 31, 2017, as expected, due to interest payments of $66 million during the quarter, of which approximately $50 million related to the senior secured notes and its payable, as you remember, semi-annually every January and July.

Additionally, since we announced our stock buyback plan for our employee [DSOP] this last fall, we have purchased over 186,000 shares to date. A majority was done -- this purchase was done in April before the quiet period. Going forward, we will be opportunistic and continue to aggressively purchase shares, given our view that the company shares are undervalued.

On Slide 17, Other Items, effective January 1, 2018, like all companies, we adopted ASC 606, the new accounting standard for revenue recognition. The effect of the accounting change did not have a material impact on our financial position, and we recognized a $1.4 million cumulative effect on adoption as an increase to our beginning equity balance.

With respect to the Tax Reform Act, we will generate income on a tax basis as a result of certain limitations on interest expense deductions and increased U.S. tax from global intangible lower tax income on foreign income, or GILTI, which will be partially offset by 100% deduction of capital expenditures. Even though we will generate taxable income, Exela has over $334 million of usable NOLs that will fully offset our federal taxes. We currently do not anticipate paying any federal taxes until some time in 2021 or '22.

For this fiscal year, we estimate our cash taxes to be under $10 million, but payable for certain states and some foreign taxes for profitable international subsidiaries. We paid $1.1 million in cash taxes during the first quarter of 2018.

On Slide 18, we are raising our 2018 guidance, which we originally provided in March. We expect revenue to be between $1.55 billion to $1.58 billion, up from $1.51 billion to $1.54 billion on a constant-currency basis. We are also increasing the low-end guidance range of our adjusted EBITDA by $5 million. The new guidance range is $295 million to $310 million. We have no change to our further adjusted EBITDA, which we expect to be in the range of $330 million to $355 million, translating into a 22% to 23% margin.

In addition for 2018, our further adjusted free cash flow conversion in the range of 87% to 89%. Our guidance includes delivering $40 million to $45 million in savings during 2018, with the remaining in 2019.

Our long-term growth view on the business remains unchanged, revenue growth on a constant-currency basis in the range of 3% to 4%, and adjusted EBITDA margin in the range of 22% to 23%, and adjusted free cash flow conversion in the range of 87% to 89%.

Thank you. And with that, operator, I'd like to open up the call for questions.

(Operator Instructions) Joseph Foresi, Cantor Fitzgerald.

I wanted to ask about obviously the raise in guidance on the top line. Maybe you can just talk about the drivers and what is giving you the confidence to raise that guidance. And are there any onetime projects that are taking off or you're starting to get a boost from in the numbers, and how does that flow through the year?

Yes. Thanks for the question, Joe. If you think about our business and our contracts, they're long-term in nature, right? They're typically three to five years, and we have over 95% renewal rates. So we have good visibility into our revenue, typically just over 90% at any point in time. If you look at the numbers we delivered in the first quarter, we're very pleased with the results, and we continue to believe we're on the right trajectory. Ron talked about the large contract on the last call, which is starting to ramp up. So we feel really good from a top line perspective, and thought it made sense to increase the guidance, given that fact.

Maybe you could give us a little color on your expectations by segment for 2018, just from a growth perspective. How should we think about that? I know that legal's got some projects to start and stop fairly quickly, but how do we think about that more on the segment level side?

Given the overall growth percentages, we see a majority of it coming through our largest segment, our ITPS, right? We have over [to] 75% of our revenue in that segment. That's a big driver. That's where we're strong in industries with banking and financial services and insurance. And as those industries grow, we pick up incremental volumes. We move along with the market. Those markets, looking out, grow somewhere between 6% and 8%. With respect to the legal, we think that some were -- it's very steady, as we talk in baseball, a lot of singles and doubles, and we see that somewhere around the $90 million-ish, give or take. And then, within healthcare, typically we see a little bit of a dip because open enrollment, and people are using up their claim dollars in Q4. It starts to pick up throughout the year. So you will see growth in healthcare this year, but not to the extent as ITPS.

You talked about the $45 million in savings. Maybe you could tell us a little bit more about that target. Is that something that you think you might be able to exceed this year? Are you comfortable with the current pace of the flow-through into the rest of the income statement? And what does that encompass particularly as far as the cost savings that you've been working on?

Yes. We feel really good about the cost savings, and we're on track. If you think about the $40 million to $45 million, they're kind of broken up into our typical three buckets. Our headcount savings are between $16 million and $18 million, about $19 million to $22 million in vendor savings, and then $4 million to $5 million in lease savings.

(Operator Instructions) Arun Seshadri, Credit Suisse.

Just a couple from me. First, I just wanted to understand, obviously nice revenue growth in the quarter, but it looked like gross profit actually declined. I just wanted to understand how that happened, whether there were any ramp-up costs, et cetera. And then also, what was the impact of postage in the numbers?

So if you take a look, we don't really look at it on a gross margin basis because we have a lot of business optimization cost flowing through. We focus on an EBITDA perspective. It's a better measure at this point in time. We incurred $14.5 million in optimization, of which I would say somewhere about 75%, 80%, give or take, runs through cost of sales. So that's kind of the overall breakout. We were pleased with the SG&A decrease. We're going to continue to work on these cost savings, and as you can see, what we're looking at doing, we feel highly confident things we control with a majority within the headcount area. And then with respect to your comment on postage, we don't really break out postage separately. We follow U.S. GAAP revenue. We just adopted the 606, which drives the accounting for our revenue.

The other thing was there was a $7.5 million equity -- I don't know what. It shows up in your cash flow statements as cash paid for equity issue costs. What was that related to?

That's a good point. This was basically fees we incurred one time related to the deal back in July. And then, finally, we paid $7.5 million of it. So we were able to get pretty favorable terms. So one time.

In terms of cost savings recognized already, is there any way you could give us how much of your full-year $40 million to $45 million of cost savings, how much of that was actually reflected in the numbers in Q1?

About $14.8 million.

I'm sorry, so $14.8 million of the $40 million to $45 million was reflected--?

Correct. Yes.

First quarter? Okay, got it.

Brad Elliott, RBC.

I just wanted to follow up in a similar vein to the last two questions on some of the cost-saving stuff. When you said that in '18 you're going to have $40 million to $45 million, and then the balance is going to be in 2019, can you just refresh what that balance is going to be given that in the OM, that when you did the deal last year, you had some cost savings and some that you weren't including in your full adjustments. Can you give us a refresh on what the '19 number would look like, or a range?

What we have remaining is about $81 million or so in our further adjusted that we're working on. So I think that's in our fact sheet on our website. So if we get $40 million to $45 million now, you can do the math, and there's a remainder of roughly $40 million-ish for '19 to flow through.

And then, Jim, in your prepared remarks, you said that the full integration and the conversion was about 12 to 15 months. Is that from the deal closing in July, or is that kind of where you stand now?

I would say from that perspective, it's from when the deal closed. We're working hard on the back half of this year, and there'll be incremental work to do into 2019. But if you remember, some of these we're dealing with large customers that we have to work with their IT departments, their CTOs when we start to move around some of the technology. So we're ready to move as quick as it makes sense with our customers. So those are the types of things, things like headcount, vendor saves, those move a lot quicker, obviously.

The last one on the incurred costs in the first quarter with the business optimization, that $26.5 million, do you expect more of that throughout the balance of the year, or is that just for those contracts that are starting up on the first quarter?

I think you're talking about the investment we made.

Yes.

Yes. I think that this company generates a lot of cash, and we're looking to drive those incremental savings. But, I think that's going to come down over the next few quarters as we move through the end of the year. That's the trajectory.

Any more thoughts on the acquisition front? Obviously the Asterion acquisition was a nice tuck-in. Are you looking more for other global opportunities at this point, or you kind of set with the integration at hand?

So overall, we're pleased with this tuck-in. It's small. It makes a lot of sense. It's a simple integration to do. Looking out, we may look at some tuck-ins down the road, but think at this point we're pretty satisfied with things.

We're focused on what we have.

We're focusing on really de-levering to three times and driving top line growth.

That acquisition, was that something that they approached you, or how do you source those? Is that something that one of your sponsors was in touch with, as well?

The reality of is these things come up every single day, right? They kind of knew about the Novitex deal. Obviously, we bought the U.S. piece. There was a short window for us to execute on, and it made a lot of sense. So that's typically how it works.

Joseph Foresi, Cantor Fitzgerald.

I had just two final ones. Maybe you can help me with the cadence of revenue and margins through the back half of this year. Anything we should know from a seasonality perspective, and if you can talk about that steady pace of I guess you talked about $14 million. Is that what we should expect per quarter? And then, I had one other final question.

The thing is, is we have over 3,500 customers with different mandates, different margins, et cetera. As we ramp up, we typically start with a lower margin, and they start to improve as we get to steady-state. I think part of the revenue growth during the quarter and sequentially was from ramping up a large customer. We see, as we move through the year, that our margins will expand. You can get to it through our guidance of adjusted EBITDA margins for an increase of 220 to 320 bps. And then, we have Novitex. And as we put in BPA, you're going to start to see that expansion.

Transformation.

And the transformation.

So it sounds like it's a gradual increase through the next couple quarters.

That's correct.

On the use of cash, any thoughts about -- obviously you did a small acquisition, but what's your primary objective for the use of cash? I assume it's to pay down debt. And could you be deleveraging quicker than expected if cash flow improves for you? I'm just trying to get a sense of what you'd be looking to use the cash for.

I think it's a combination. I think [if] we look at it, deleveraging is very important to us. That's important. I think that we can be opportunistic with respect to the stock buyback. We haven't bought really back that many shares as of yet. And then, if there's a unique tuck-in acquisition, we'll look at those. But I think overriding, our debt is a little expensive, and we're going to look to de-lever it.

Any chance of refinancing the debt?

I think you would ask every -- I don't know if that's a fair. I mean, it's a good question.

You [wouldn't] have any ideas.

Arun Seshadri, Credit Suisse.

Just wanted to get a sense for HS. How do you expect HS to progress through the balance of the year in terms of growth cadence? When do you expect that to return to growth?

I think as we look out, we see it steadily increasing through the rest of this year. Back in previous quarters, we had the ICD-9 to -10 conversion, where it was really lumpy, and we had that kind of flow through the system through the end of Q4 of this year. So I don't see anything lumpy in the next few quarters.

Steady, yes.

As far as the optimization and restructuring expenses, we obviously saw that a little bit higher, like $14.5 million in Q1. In your full-year guidance, two things. One, what do you expect for full-year optimization and restructuring expenses?

I think that obviously, with the acquisition of Asterion, we're going to have some more. I think we're working through that at this point in time. We just did the acquisition. We have some ideas, but haven't fully vetted them yet. So I think that'll be on a follow-up earnings call once we start to digest.

So you'll probably have that, but can you talk about that is the only additive thing (inaudible) what you said before, was something around $25 million of optimization and restructuring?

Yes. I think the original guidance before this was around $25 million.

In terms of GAAP EBITDA, I don't know if you could bridge for us against the good [improvement] in adjusted EBITDA guidance, which was good to see. Just wanted to get a sense for where do you think GAAP EBITDA ends up in a range for the year.

We haven't given that guidance yet, but what I would say is it continues to transform and improve. If you look at where we were in Q3, we went from negative $21 million up to positive $56 million. Obviously, you know there was some impairment at that point in time. We're going to have some higher amortization this year related to the legacy trade names that we have to write off over a year, which we discussed on the Q4 call. So I think you'll see us, as the savings flow through from biz-op into the P&L up above, you'll start to see more GAAP as we move through the year.

And this will conclude our question-and-answer session. I would like to turn the conference back over to Ron Cogburn for any closing remarks.

Thanks, Austin. We really appreciate everybody participating in the call today. As you can tell, we're very pleased with the quarter. For those of you that have not had the pleasure of visiting us at one of our innovation centers, please reach out to myself, Jim Mathias, or Jim Reynolds, and we'd love to host you and your group there. I think it makes a lot of sense in understanding our technology and the power of the business process automation.

We look forward to speaking with everyone again next quarter. Thanks for participating.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.